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Released September 11, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Georgia Power Company (Atlanta, Georgia) has agreed to absorb about 25% of its cost to build two new nuclear units at the Alvin W. Vogtle Nuclear Power Station in Waynesboro, Georgia. In a proposed settlement with the Public Interest Advocacy staff of the Georgia Public Service Commission (GPSC) (Atlanta, Georgia), announced August 30, the utility agreed to not seek recovery of about $2.62 billion of the $10.2 billion it spent to build the two new units, one of which came online this summer.
If approved by the five-member GPSC, the proposed settlement would cap the recovery from Georgia Power's customers for that utility's share of capital construction costs for Units 3 and 4 at the Vogtle plant at approximately $7.56 billion.
Georgia Power, a subsidiary of Southern Company (NYSE:SO) (Atlanta, Georgia), owns 45.7% of two new nuclear units, which are the first new-build nuclear power plants built in the U.S. in over three decades. The other owners, none of which are regulated by the GPSC, are Oglethorpe Power Corporation (Tucker, Georgia) (30%), the Municipal Electric Authority of Georgia (MEAG Power) (Atlanta) (22.7%) and Dalton Utilities (Dalton, Georgia) (1.6%).
The settlement would not apply to the other three co-owners of Vogtle Units 3 and 4.
Construction of the two 1,117-megawatt (MW) reactors at Vogtle has been bedeviled by project delays and cost overruns. Unit 3 began commercial operations this summer, years after its original planned in-service date. For more on that, see August 2, 2023, article - Years Late and Over Budget, Vogtle Unit 3 Begins Commercial Operations. Nuclear fuel was loaded in Unit 4 last month. For more on that, see August 23, 2023, article - Vogtle Nuclear Power Unit 4 Reaches Latest Milestone with Fuel Loading. Unit 4 is scheduled to begin commercial operations either in the fourth quarter of 2023 or the first quarter of 2024.
The project's total construction costs are unclear, largely because only Georgia Power has been required to disclose its costs publicly. It has been estimated that the four co-owners paid about $32 billion to add 2,234 MW of new nuclear generating capacity to the Vogtle complex. On a per-megawatt of installed capacity basis, the two new units at Vogtle would be the most expensive power plant ever built.
The $32 billion estimated project cost does not reflect billions of dollars the co-owners received from Toshiba in 2017 as part of that company's exit from the Vogtle project. Toshiba exited the nuclear construction business after cost overruns at Vogtle drove its subsidiary, Westinghouse Electric Company (Cranberry Township, Pennsylvania), into Chapter 11 bankruptcy.
The August 30 proposed settlement's requirement that Georgia Power absorb about $2.6 billion of its construction capital costs is not the first time the utility had to eat some of the cost overruns of the Vogtle project. Several years ago, Georgia Power agreed to absorb about $694 million in capital construction cost overruns.
The August 30 settlement was signed by several intervenors, including Georgia Watch, Georgia Interfaith Power and Light, Partnership for Southern Equity and the Georgia Association of Manufacturers.
But the matter isn't completely settled. Starting September 8 and continuing over the remainder of 2023, the utility and intervenors will file testimony and examine witnesses in a prudency hearing that is expected to be decided by the GPSC in December. If the proposed settlement is approved by the regulators, all issues of Vogtle's prudency review would be resolved.
But if Unit 4 does not begin commercial operations by March 31, 2024, as scheduled, the draft deal requires Georgia Power, not its customers, to absorb its proportional share of costs incurred after that. And, in a statement from the GPSC, if Vogtle Unit 4 is not operating commercially by March 31, 2024, Georgia Power's return on equity will be reduced to zero until Unit 4 reaches commercial operation.
If approved by Georgia utility regulators, the proposed settlement also would increase electric bills for Georgia Power's customers by about 5%. For that average residential customer, that works out to about $9 per month.
In separate statements released August 30, Georgia Power highlighted the reliable, emission-free electric generation that is expected to operate for six to eight decades while the GPSC highlighted the $2.6 billion that Georgia Power customers will not be charged for the utility's share of capital construction costs. Both mentioned the 5% increase customers can expect to see on their monthly electric bills.
GPSC Chairman Jason Shaw thanked the commission's staff for their hard work on the Vogtle project. "With the semiannual Vogtle Construction Monitoring reports and the countless hours of analysis on this project, I assume there has been more evidence presented in this docket than in any docket in PSC history. The culmination of construction on this historic project marks the expansion of clean energy production for another 60 to 80 years here in Georgia."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
If approved by the five-member GPSC, the proposed settlement would cap the recovery from Georgia Power's customers for that utility's share of capital construction costs for Units 3 and 4 at the Vogtle plant at approximately $7.56 billion.
Georgia Power, a subsidiary of Southern Company (NYSE:SO) (Atlanta, Georgia), owns 45.7% of two new nuclear units, which are the first new-build nuclear power plants built in the U.S. in over three decades. The other owners, none of which are regulated by the GPSC, are Oglethorpe Power Corporation (Tucker, Georgia) (30%), the Municipal Electric Authority of Georgia (MEAG Power) (Atlanta) (22.7%) and Dalton Utilities (Dalton, Georgia) (1.6%).
The settlement would not apply to the other three co-owners of Vogtle Units 3 and 4.
Construction of the two 1,117-megawatt (MW) reactors at Vogtle has been bedeviled by project delays and cost overruns. Unit 3 began commercial operations this summer, years after its original planned in-service date. For more on that, see August 2, 2023, article - Years Late and Over Budget, Vogtle Unit 3 Begins Commercial Operations. Nuclear fuel was loaded in Unit 4 last month. For more on that, see August 23, 2023, article - Vogtle Nuclear Power Unit 4 Reaches Latest Milestone with Fuel Loading. Unit 4 is scheduled to begin commercial operations either in the fourth quarter of 2023 or the first quarter of 2024.
The project's total construction costs are unclear, largely because only Georgia Power has been required to disclose its costs publicly. It has been estimated that the four co-owners paid about $32 billion to add 2,234 MW of new nuclear generating capacity to the Vogtle complex. On a per-megawatt of installed capacity basis, the two new units at Vogtle would be the most expensive power plant ever built.
The $32 billion estimated project cost does not reflect billions of dollars the co-owners received from Toshiba in 2017 as part of that company's exit from the Vogtle project. Toshiba exited the nuclear construction business after cost overruns at Vogtle drove its subsidiary, Westinghouse Electric Company (Cranberry Township, Pennsylvania), into Chapter 11 bankruptcy.
The August 30 proposed settlement's requirement that Georgia Power absorb about $2.6 billion of its construction capital costs is not the first time the utility had to eat some of the cost overruns of the Vogtle project. Several years ago, Georgia Power agreed to absorb about $694 million in capital construction cost overruns.
The August 30 settlement was signed by several intervenors, including Georgia Watch, Georgia Interfaith Power and Light, Partnership for Southern Equity and the Georgia Association of Manufacturers.
But the matter isn't completely settled. Starting September 8 and continuing over the remainder of 2023, the utility and intervenors will file testimony and examine witnesses in a prudency hearing that is expected to be decided by the GPSC in December. If the proposed settlement is approved by the regulators, all issues of Vogtle's prudency review would be resolved.
But if Unit 4 does not begin commercial operations by March 31, 2024, as scheduled, the draft deal requires Georgia Power, not its customers, to absorb its proportional share of costs incurred after that. And, in a statement from the GPSC, if Vogtle Unit 4 is not operating commercially by March 31, 2024, Georgia Power's return on equity will be reduced to zero until Unit 4 reaches commercial operation.
If approved by Georgia utility regulators, the proposed settlement also would increase electric bills for Georgia Power's customers by about 5%. For that average residential customer, that works out to about $9 per month.
In separate statements released August 30, Georgia Power highlighted the reliable, emission-free electric generation that is expected to operate for six to eight decades while the GPSC highlighted the $2.6 billion that Georgia Power customers will not be charged for the utility's share of capital construction costs. Both mentioned the 5% increase customers can expect to see on their monthly electric bills.
GPSC Chairman Jason Shaw thanked the commission's staff for their hard work on the Vogtle project. "With the semiannual Vogtle Construction Monitoring reports and the countless hours of analysis on this project, I assume there has been more evidence presented in this docket than in any docket in PSC history. The culmination of construction on this historic project marks the expansion of clean energy production for another 60 to 80 years here in Georgia."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
